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Saturday, January 31, 2015

Below is a fictionalized case study that presents dilemma faced in real organizations. And written by me is the recommended solution to the problem. This has been published in Business Manager Magazine February 2015 edition.

Alectek Shoes is a manufacturer of popular shoes in the country. It is one of the oldest footwear manufacturers in India with a sizeable market share in the industry. It also exports considerable portions of its premium segment products to overseas markets. This company has a strong workforce of over 11,000 employees. It is engaged not only in manufacturing but also in marketing operations through its own retail outlets.

Being an old company, most of its HR policies are conventional and empirical. Based on its bitter experience in the past, the top management firmly believed that the candidates with a revolving-door approach towards a job (changing jobs frequently) are less committed employees and are prone to leave the organization early. The recruitment philosophy and policy of this company clearly reflected this and, understandably, discriminated against those candidates who changed their jobs frequently in the past. In fact, the HR people were instructed to eliminate the applicants with a poor track record of jobs stability, irrespective of their levels of skills and abilities. These candidates were eliminated by the HR department either by rejecting their application at the scrutiny stage or by eliminating them in the very early phase of the selection process. Since its compensation packages are the best in the industry, the company had so far never faced any problem in finding the required number of people to fill the job positions.

Recently, the company developed a huge manufacturing facility in a metropolitan city located in southern India in order to double its production capacity. With this production expansion, the company was looking to emerge as India's leading footwear player. As part of this expansion plan. It decided to strengthen the manufacturing, sales and marketing division with increased workforce. It decided to conduct a major recruitment drive for filling all the new vacancies in addition to the routine ones. Obviously, the number of positions to be filled up in the company just swelled. The company conducted an extensive advertisement campaign to attract the best candidates for filling the available job positions.

The recruitment campaign evoked a good response in the sense that many prospective candidates applied for the advertised positions. However, the scrutiny of these applications revealed that a significant number of these candidates had poor job stability records as they seemed to have worked in different companies for short tenures. But for this shortcoming, these candidates were found to be suitable for the offered positions. Due to this unprecedented situation, the company was now in a

quandary. If these candidates were eliminated, the company might not get a sufficient number of candidates with the required skills for filling all the existing vacancies. In contrast, if they were selected, the firm might not get a sufficient number of candidates with the required skills for filling all the existing vacancies. In contrast, if they were selected, the firm might face problems of unanticipated and untimely employee desertions and the resultant work disturbances.

However, the HR manager was clear about how this situation ought to be handled. He demanded drastic revisions in the HR policy to make it relevant for the existing labour market scenario. First of all, he wanted some major alterations in the recruitment policy to enable the organization to consider seriously and equitably the candidature of all the applicants, irrespective of their past track record about job stability. Next, he insisted that the company design and develop effective career development Programmes for the employees immediately so that there were better career prospects available for them in the company itself. This should also obviate their need for leaving the company to seek better prospects elsewhere, he averred. Moreover, a good career plan would establish long-term relationships between the organization and the employee through better employee commitment and motivation. He also insisted on evolving plans for training these employees continuously as part of the skill enhancement exercise. These measures, he believed, would bring down the chances of employee desertion and associated problems.

However, the management did not buy his arguments. It raised serious doubts about the efficacy of the HR manager's proposal. It actually feared that a better trained and skilled employee would leave the organization early as there would be an increased demand for his skills in the labour market. It also felt that it was difficult to thwart a habitual job deserter from quitting the organization, however effective the career development programme may be. Thus, the management insisted on maintaining the status quo in recruitment policy and asked the HR manager to come up with more practical suggestions for solving the present problem. Evidently, the HR manager was now frustrated with the orthodox approach of the management.

Questions for discussions and solutions:

1. What is your assessment of the whole situation in Alectek Shoes?

The HR Policies in Alectek Shoes were conventionally driven based on its past historical experiences. They needed to be updated regularly to changing competitive conditions, market scenario and keeping Alectek Shoes future growth plans in mind. The review of the HR policies process needed to be proactive rather than reacting after a situation emerged which in this case was demand for newer & more candidates for a newly setup manufacturing facility. Good, eligible candidates had applied and found to be suitable as per current market skillsets. But unfortunately, the HR policy on recruitment was found lacking to deem them fit for selection.

The HR Manager at Alectek Shoes had a solution ready to the problem faced. It was well thought out and would have been beneficial both to the company and its employees from a long – term point of view which is that of having career progression plans in place so as to retain employees and also continuously upgrading their skills by way of regular trainings. This way the employees at Alectek Shoes would have been engaged with the organization and committed to its future long-term growth. The HR Manager had analyzed the current scenario at Alectek Shoes and had thus come up with this solution.

However it was viewed with skepticism by the Management who felt that training and upgrading an employee i.e. investing in an employee and then the employee leaving the company for better prospects would endanger the company’s business profits. Hence the Management at Alectek Shoes felt that they should rather stick to their conventional HR policy of hiring only those candidates who did not change jobs frequently. The solution was downrightly rejected. The mindset of the Management at Alectek Shoes seemed to be somewhat rigid. HR function of an organization is central to the business of an organization because ultimately it is the employees who drive the future and growth of an organization. The company’s growing business scenario yearned for change but it was not supported by the Management who somewhat feared that the change management efforts may hamper its business revenues and thus in order to safeguard it decided to follow the earlier practice only.

2. What is your opinion about the role of recruitment policy in the entire controversy?

The recruitment policy needs to be reviewed such that it ensures that Alectek Shoes recruits, hires, places and retains employees who will meet skill requirements required to position the organization for future success. It must not look into their past. As the pool of skilled talent continues to shrink, it becomes more important than ever for organizations to specifically define the capabilities and skills needed by potential employees and create a work environment to attract them.

Inefficiencies in hiring may allow the competitors of Alectek Shoes to hire the best talent before it can act. Bureaucratic bungling in the hiring process also provides a glimpse of true management system and can scare off the best prospective employees.

Hiring the right employee is a key factor in the entire recruitment process. It is here that the recruitment policy of the organization plays a very pivotal role. Creating a suitable recruitment policy is the first step in the efficient hiring process. A clear and concise recruitment policy helps ensure a sound recruitment process. It specifies the objectives of recruitment and provides a framework for implementation of recruitment programme. Unfortunately the current recruitment policy at Alectek Shoes was found to be lacking towards hiring the best available talent due to past bitter experiences of the Management with some of its employees. Management viewed recruitment as a cost vis a vis the business financial implications if a newly recruited employee left. The recruitment policy needs to be unbiased. It needs to be transparent and favor merit based selection.

3. If you are made the HR manager of Alectek Shoes, what would be your suggestion to solve the problem?

The challenge in arriving at a solution for the HR Manager at Alectek Shoes is to ensure that the organization’s future needs as well career needs of aspiring candidates are not compromised while the Management also gets the desired results. The Management of Alectek Shoes did not buy the HR Manager’s proposal of being an equal opportunity employer, having effective career development programmes and continuous trainings for employees as part of skill enhancement exercise.

These measures as per the HR Manager would bring down employee attrition and its associated problems. The Management maintained an orthodox mindset and asked the HR manager to come up with alternative suggestions for resolving the present problem.

Management feared that a better trained and skilled employee would leave the organization early as there would be an increased demand for his skills in the market. It also felt that it was difficult to thwart a habitual job deserter from quitting the organization, however effective the career development programme may be.

The solution to this is to keep the existing set of employees engaged with the organization through various employee engagement activities like creation of a platform such as ‘My Voice’ to receive and to act upon employee suggestions, feedback, clarifications or grievances. Undertake process improvements on the basis of suggestions received.

Ensure Regular communication with employees by way of Mailers from Human Resource Dept. / Management of Alectek Shoes Company.

Have a Rewards & Recognition Program in Place. Recognize executives across levels for exemplary performance and consistent execution.

Do Critical review of all the policies annually and present to the Management for review. The policies to be revised on the basis of business requirements / market conditions / regulatory requirements, etc…

Adopt a work-shadow concept in the case of departing employee. A proper handover to be done by the departing individual to ensure smooth processing and continuity of operations.

By ensuring employee participation and development and valuing them may lead to development of longer-term objectives and thus stem the flow of employees leaving the organization to some extent.

4. What more can the company do in terms of career planning and development activities of the firm vis-a-is the employee attritions, besides the HR manager's suggestion?

Besides the HR Manager’s suggestion, Alectek Shoes in terms of career planning and development activities should identify critical positions and executives for succession and leadership development as a formal exercise. Succession Planning, if implemented properly will ensure an uninterrupted talent pipeline of skills.

Institutionalize a focused career progression program that aims at identifying Talent from within.

Maintain a repository of all employees who are Performance Potential and refer this repository periodically while taking key organizational decisions, fast track their career enhancement programmes.

Prepare individual development plans with all the employees to address their career and learning objectives. To achieve optimum employee productivity, Alectek Shoes must understand and address the factors promoting employee engagement such as career development. A better understanding of these factors could be developed through exit interviews with departing employees as well as through feedback from surveys of the current employees.